EURUSD Sellers Slow Ahead of Key Support; Oil, USDCAD in Focus

EURUSD Sellers Slow Ahead of Key Support; Oil, USDCAD in Focus

US Dollar, EURUSD Talking Points:

– US Equities continue to bounce after yesterday’s early-session sell-off. The S&P is re-approaching the 2800 level while the Dow is finding a bit of support off of the 25,816 area on the chart. The big question is whether that strength continues, or whether yesterday’s selling was a signal of deeper sell-offs on the horizon: The first two months of this year were undeniably bullish in US equities, showing in stark contrast to the selling that took global markets by storm in Q4 of last year. Can that 2019 strength continue into the end of Q1? Or is another bout of selling-around-the-corner, similar to what was seen in October of last year?

– FX markets remain in varying states of consolidation, with short-term USD bulls making a push-higher on the chart, extending the post-GDP run in the currency after last Thursday’s fresh low. EURUSD has fallen below a rising wedge pattern, but sellers have pulled up short of testing the longer-term support zone that runs from 1.1215-1.1300. And tomorrow brings a Bank of Canada rate decision: USDCAD is fast-approaching a key resistance area on the chart that had previously held the highs in late-January.

US Dollar Bulls Continue to Push

US Dollar strength has continued to show in the early-part of this week, with DXY climbing above and then finding support at the 96.68 level looked at yesterday. Prices are now nearing the 23.6% Fibonacci retracement of the February bullish run at 96.85, and beyond that is the 97.00 area that marks the January swing-high. If buyers are able to push beyond that price, follow-through resistance potential exists at 97.37 (the February swing high) and 97.71 (the November, December 2018 swing highs).

EURUSD Eight-Hour Price Chart

After yesterday’s bearish move, EURUSD sellers have begun to slow their approach as that longer-term support has neared. This has led into a build of swing-lows around the 1.1320 area, which may make the prospect of short-side approaches a bit of a challenge given the close proximity to longer-term support just below.

Prices have been recovering so far this week, and WTI is now less than a dollar away from a re-test of that resistance. The big question here – is the third time the charm? Will bulls be able to break through after last week’s resistance inflection brought a higher-low into the mix?

Using Oil as a driver, I had looked at the topside of USDCAD in that webinar, and that theme has continued to run. Prices are now trading at fresh monthly highs; but quickly nearing on the chart is a big zone of resistance that contains multiple Fibonacci levels. This is also the zone that helped to stop the January advance in its tracks.

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